VPA commissioners approve restructuring plan

Wednesday, May 29, 2013

The Virginia Port Authority Board of Commissioners on Tuesday unanimously approved a restructuring plan for the port authority administration and Virginia International Terminals, the state-owned terminal operating company aimed at improving efficiency, competitiveness and responsiveness to customers.
Key elements of the restructuring include centralizing port operations under the direct oversight of the VPA to align the economic development of the state with port initiatives, and eliminating duplicate levels of management and administrative functions between the VPA and VIT. The changes are expected to save $3 million to $6 million that can be applied to port improvements and marketing, improve coordination between the VPA and VIT by aligning the goals and objectives of the two organizations, improve customer service, and unify the port's communications to stakeholders.
The implementation of the new organizational structure is expected to take about a year, with most of the changes coming in the next three months, the VPA said.
The restructuring has been a year in the making and comes after the VPA and state officials in Richmond recently decided not to accept offers from strategic and financial investors to privatize the port for 48 years in exchange for fees, property, infrastructure investment and other considerations potentially worth up to $4 billion. The moves came in response to pressure from Gov. Bob McDonnell to improve the performance of the port, which he claimed was not attracting enough cargo relative to other East Coast rivals.
“I want to make clear is that this is not a workforce reduction effort: VPA and VIT each went through that exercise four years ago,” Board Chairman William Fralin said. “Rather, this collaborative effort sets out multiple goals: streamlining operations, creating efficiencies, improving communications, speaking to the market with a unified voice and eliminating duplication where possible, to name a few. The ultimate goal is to make the Port of Virginia the gateway port on the U.S. East Coast.
“As we leverage our advantages to move this port forward, this restructuring will insure that VPA and VIT are managed and operated as one entity, not two,” Fralin continued.
The VPA is in the midst of searching for a new executive director. Rodney Oliver has served as acting port director since the departure of Jerry Bridges last fall. The new port chief will have oversight and responsibility for both the VPA and VIT.
Several steps have already been taken, or are underway, to prepare for the restructuring, including:

Submission of requests to the Internal Revenue Service to exclude income from the VIT and Hampton Roads Chassis Pool following the the conversion of the VIT to an LLC owned by the VPA;

A thorough examination of the finances, internal controls and operations of VIT;

Normalization of benefits for workers of both organizations;

The drafting of more flexible procurement guidelines based on new authority granted by the General Assembly;

Preparation of incentive plans for immediate retirement of eligible VPA and VIT staff;

Discussions among senior management regarding new staffing and strategic planning;

Developing plans to utilize the VPA's new Industrial Development Authority powers to create economic development opportunities outside the port; and